A city was awarded a $600,000 federal grant to help finance a bridge construction project that is expected to take two years to complete. The grant will be paid in two installments: 1 60% nonrefundable at the beginning of the project in Year 1, and 2 40% when the project is completed. Capital Projects Fund revenue should be recognized in Year 1 in the amount of

Question

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The Capital Projects Fund revenue should be recognized in Year 1 as the 60% nonrefundable grant installment is received, which is $360,000 ($600,000 x 0.60). The remaining 40% ($240,000) will be recognized when the project is completed.

A City Was Awarded a $600,000 Federal Grant to Help